Enter your self-employment profit and see your maximum 2026 solo 401(k) contribution — the $24,500 employee deferral plus the 20% employer piece, up to $72,000. Then compare it against a SEP-IRA and see the income tax it saves. Built for sole proprietors, 1099 contractors and single-member LLCs.
Built & maintained by Marcus, freelancer·Figures from IRS (Notice 2025-67 & Pub 560)·Last updated July 2026
2026 limits: the employee deferral rises to $24,500 (from $23,500) and the total solo 401(k) limit to $72,000 (from $70,000). Catch-up is $8,000 at age 50+, and a bigger $11,250 at ages 60–63 under SECURE 2.0. Figures from IRS Notice 2025-67.
$24,500
Employee deferral limit
$72,000
Total limit under 50
20%
Employer rate on net earnings
+$11,250
Catch-up at ages 60–63
$/ yr
Maximum 2026 solo 401(k) contribution
$43,087
$24,500 employee + $18,587 employer
How it's built
Net profit (Schedule C)$100,000
Less ½ self-employment taxSE tax $14,130 × 50%−$7,065
Net earnings from self-employmentthe base for the 20% employer piece$92,935
Employee deferralup to $24,500$24,500
Employer profit-sharing20% of net earnings$18,587
Catch-up contributionage 50+$0
Total contribution$43,087
Uses the net profit and age from the Solo 401(k) Max tab. A SEP-IRA is the employer 20% only; a solo 401(k) adds the employee deferral on top.
Solo 401(k)
Max contribution
$43,087
deferral + 20% employer
Employee deferral$24,500
Employer 20%$18,587
Catch-up$0
SEP-IRA
Max contribution
$18,587
20% employer only
Employee deferralNone
Employer 20%$18,587
Catch-upNone
SEP-IRA's upside: it's simpler to open, never files an annual Form 5500, and can be set up and funded as late as your extended filing deadline. A solo 401(k), by contrast, must file a short Form 5500-EZ once its assets top $250,000. If you're maxing the $72,000 either way — which happens around $360,000 of net earnings — the two are equivalent and the SEP wins on paperwork.
$/ yr
%
I take the 20% QBI deduction a pre-tax contribution also shrinks your QBI, so we trim the federal saving to match
Estimated tax saved this year (traditional / pre-tax)
Federal income tax saved22% bracket$7,583
State income tax saved0%$0
Total income tax saved$7,583
It does not cut your self-employment tax. The 15.3% SE tax is figured on your net profit before any retirement contribution, so a solo 401(k) only saves income tax, not SE tax. That's the honest limit most calculators skip. A Roth solo 401(k) gives no deduction now but grows and withdraws tax-free.
Federal saving uses the marginal bracket you pick; your real rate may straddle two brackets. With QBI on, we reduce the federal saving by 20% because a lower profit also lowers your qualified business income. This estimates the first-year deduction value only, not lifetime growth.
How the solo 401(k) contribution limit works in 2026
A solo 401(k) — also called an individual or one-participant 401(k) — is a retirement plan for a business with no employees other than you and a spouse. Its edge over every other self-employed plan is that you contribute as both the employee and the employer, so the limits stack. For 2026 the combined cap is $72,000 if you're under 50, up from $70,000 in 2025.
The employee side is an elective deferral of up to $24,500 in 2026 (it was $23,500 in 2025). This is a flat dollar figure — it doesn't scale with income beyond a 100%-of-earnings ceiling — which is exactly why the solo 401(k) is so powerful at modest profit. The employer side is a profit-sharing contribution of up to 20% of your net self-employment earnings. The two combined can't exceed $72,000, and if you're 50 or older you add a catch-up — $8,000, or $11,250 at ages 60 to 63 — on top of that cap.
The one number that trips people up is net earnings from self-employment. It's not your gross revenue and not even your Schedule C net profit — it's your net profit minus the deduction for one-half of your self-employment tax. The 20% employer rate applies to that figure. The calculator above does the self-employment tax step for you, so you only enter your net profit.
Why the employer rate is 20%, not 25%
The IRS lets an employer contribute up to 25% of compensation as profit-sharing. For a self-employed person there's a twist: your own contribution reduces the very "compensation" the percentage is based on. Solving that circle, 25% of pay-after-the-contribution works out to exactly 20% of pay-before-the-contribution (25% ÷ 1.25 = 20%). So every reputable solo 401(k) or SEP calculator uses 20% of net self-employment earnings for a sole proprietor — not 25%. Anyone quoting 25% on your full profit is overstating what you can actually put in.
Worked through on $100,000 of net profit: self-employment tax is about $14,130, half of which ($7,065) comes off to give net earnings of roughly $92,935. The employer piece is 20% of that — about $18,587 — and you add the $24,500 employee deferral for a total near $43,087. A SEP-IRA on the same income would allow only the $18,587.
Solo 401(k) vs SEP-IRA — which should a freelancer use?
Both let a one-person business shelter up to $72,000 in 2026, and both use the same 20%-of-net-earnings employer math. The difference is the employee deferral: a solo 401(k) adds up to $24,500 that a SEP-IRA simply doesn't have. That means at the same income a solo 401(k) lets you contribute up to $24,500 more — and the gap is largest where it matters most, at low and moderate profit.
On $60,000 of net profit, a SEP-IRA caps out near $11,000, while a solo 401(k) allows roughly $35,000 — more than three times as much — because the deferral isn't tied to a percentage. Both plans only converge at the top: the employer-only SEP doesn't reach the $72,000 ceiling until about $360,000 of net earnings, whereas the solo 401(k) gets there around $237,500. The Solo 401(k) vs SEP-IRA tab shows both numbers for your profit.
So why would anyone pick the SEP? Simplicity and deadline. A SEP-IRA can be opened and funded as late as your extended tax-filing deadline, needs no year-end election, and never files a Form 5500. A solo 401(k) needs the plan formally in place (and the deferral elected) closer to year-end, and must file a short Form 5500-EZ once its assets pass $250,000. If you routinely max the full $72,000, or you decide contributions after the year ends, the SEP's paperwork edge can outweigh the solo 401(k)'s bigger low-income limit.
How much tax does a solo 401(k) actually save?
A traditional (pre-tax) solo 401(k) contribution is deductible against your income tax. Both halves — the employee deferral and the employer profit-sharing — come off your taxable income, so a $40,000 contribution in the 22% bracket saves roughly $8,800 in federal income tax, plus whatever your state charges. That's real money the year you contribute, on top of decades of tax-deferred growth.
Here's the honest catch that separates a good calculator from a misleading one: a solo 401(k) does not lower your self-employment tax. SE tax is calculated on your net profit before any retirement contribution, so unlike a home-office or business expense, this deduction never touches the 15.3%. The Tax Savings tab therefore shows income tax only — and if you claim the 20% QBI deduction, it trims the federal saving a little, because a smaller profit also means a smaller QBI deduction.
If you'd rather pay tax now and never again, a Roth solo 401(k) uses the same $24,500 deferral limit but gives no upfront deduction; the money grows and comes out tax-free in retirement. Many freelancers split the difference — Roth deferral for tax-free growth, traditional employer profit-sharing for the deduction today.
Frequently Asked Questions
How much can I contribute to a solo 401(k) in 2026?
For 2026 you can contribute up to $72,000 to a solo 401(k) if you're under 50, in two parts. As the employee you can defer up to $24,500 of your earned income. As the employer you can add a profit-sharing contribution of up to 20% of your net self-employment earnings (net profit minus half your self-employment tax). The two together are capped at $72,000. If you're 50 or older you can add an $8,000 catch-up on top ($80,000), and if you're 60 to 63 the catch-up is $11,250 ($83,250). The employee deferral is the same fixed dollar amount whatever your income, which is why a solo 401(k) lets you save far more than a SEP-IRA at low and moderate profit.
How is a self-employed solo 401(k) contribution calculated?
Start with your net profit from Schedule C. Subtract half of your self-employment tax to get your net earnings from self-employment. The employer profit-sharing piece is 20% of that figure — not 25%, because for a self-employed person the contribution reduces the very compensation it's based on, so the 25% rate works out to an effective 20%. The employee deferral is a separate amount, up to $24,500, limited only to 100% of your earned income. Add the two (plus any catch-up) and cap the total at $72,000. This calculator runs that full calculation, including the self-employment tax step, from the single net-profit number you enter.
Solo 401(k) vs SEP-IRA — which lets me contribute more?
At the same income, a solo 401(k) almost always wins for a one-person business. A SEP-IRA is only the employer piece: 20% of your net self-employment earnings, up to $72,000. A solo 401(k) adds a $24,500 employee deferral on top of that same 20%, so it beats the SEP by up to $24,500 (more with a catch-up). The gap matters most at lower income: on $60,000 of profit a SEP allows roughly $11,000 while a solo 401(k) allows about $35,000. Both reach the $72,000 cap eventually — the SEP not until around $360,000 of net earnings, the solo 401(k) at roughly $237,500. The SEP's one edge is simplicity and a later deadline; the Solo 401(k) vs SEP-IRA tab shows both figures for your numbers.
Does a solo 401(k) contribution reduce my self-employment tax?
No — and this is the honest catch most calculators skip. Self-employment tax (15.3% of 92.35% of your profit) is figured on your net profit before any retirement contribution, so putting money in a solo 401(k) does not lower it. What a traditional (pre-tax) solo 401(k) does lower is your income tax: both the employee deferral and the employer contribution are deductible, so a $40,000 contribution in the 22% bracket saves about $8,800 in federal income tax, plus state. The Tax Savings tab estimates that income-tax saving. A Roth solo 401(k) gives no upfront deduction but grows tax-free instead.
What counts as net earnings from self-employment for the 20%?
It's your net profit from Schedule C minus the deduction for one-half of your self-employment tax. So if your business nets $100,000, your self-employment tax is about $14,130, half of that is roughly $7,065, and your net earnings from self-employment are about $92,935. The 20% employer profit-sharing contribution is applied to that $92,935, not to the full $100,000. The compensation that can be counted is capped at $360,000 for 2026, which is where the 20% profit-sharing piece alone reaches the $72,000 limit.
What's the deadline to open and fund a solo 401(k) for 2026?
Under the SECURE Act, a sole proprietor can adopt a new solo 401(k) plan up to their business tax-filing deadline, including extensions, and still make employer profit-sharing contributions for the prior year. Employee elective deferrals for a self-employed person are treated as made by year-end but the deposit for a sole proprietor can generally be made by the filing deadline too. In practice, to capture the full 2026 employee deferral it's safest to formally elect it before December 31, 2026. Employer contributions can then follow by your 2026 filing deadline in 2027. Confirm timing with your plan provider and CPA.
Can I contribute to a solo 401(k) if I also have a job with a 401(k)?
Yes, but the $24,500 employee deferral limit is per person, not per plan. If you defer $15,000 into your employer's 401(k), you only have $9,500 of employee deferral left for your solo 401(k) in 2026. The employer profit-sharing side is separate — your solo 401(k) can still take up to 20% of your self-employment net earnings, subject to the overall $72,000 limit per unrelated employer. This calculator assumes the full $24,500 deferral is available; lower it in your head if you're also deferring at a day job.
Sources & how we calculate
From your net profit we compute self-employment tax as 15.3% of 92.35% of profit (the 12.4% Social Security portion stops at the $184,500 wage base; the 2.9% Medicare portion has no cap), then subtract half of it to get net earnings from self-employment. The employer profit-sharing contribution is 20% of those net earnings — the self-employed equivalent of the 25% rate. The employee deferral is up to $24,500, limited to 100% of earnings, and the two are capped together at $72,000, with an $8,000 or $11,250 catch-up added on top for eligible ages. The SEP-IRA figure is the same 20% employer piece with no deferral. Tax savings apply your marginal federal bracket (trimmed for QBI if selected) plus any state rate to a traditional contribution; a solo 401(k) does not reduce self-employment tax. Everything runs in your browser; nothing is sent anywhere.
Estimate only, not tax or investment advice. Your true limit depends on your exact self-employment tax, other 401(k) deferrals, business structure and filing status. Confirm figures with your plan provider and a CPA or EA before contributing.
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